Arrangements for retirement (or resignation) of a partner will vary greatly between practices and the partnership agreement provisions will define aspects particular to the practice. The partnership agreement should therefore be the first reference document when there is to be a change to the partnership.
A retiring partner will be required to remove his / her capital from the business. A major issue for practices will be the method of raising the funds to pay the outgoing partner, and this needs to be discussed with the partners and accountant at a very early stage – if a replacement equity partner is to be recruited to provide these funds the process will have to start immediately in order to be completed in sufficient time to provide a clean change-over of funds. If a new partner is recruited for a mutual assessment period before reaching parity (and before buying into the practice), alternative arrangements for repaying the outgoing partner may be required. If a new partner is not determined to be the best way forward, then other methods of payment must be explored, all within the partnership’s defined notice period.
Subscribers to the FPM website can access a model Partner Retirement Checklist in the practice administration index of the FPM policies and procedures library. If you are not a member, have a look at the information about the benefits of membership and how to subscribe.
BMA guidance for GPs who are retiring (with an emphasis on single-handed GPs). Topics covered include: